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The minimum wage imperative

Letter to the Editor | Friday, November 18, 2005

Have you ever stopped to imagine what life is like for workers surviving on a minimum wage trying to provide for themselves and their families? Does it strike you as unjust that minimum wage jobs translate into yearly wages below the poverty line? We often fail to recognize the harsh realities of America’s working poor not out of indifference but, rather, out of disbelief. The mere reality of a life at a low wage is incredulous to us from our insulated, isolated and comfortable towers at the University. While the faces and the inherent dignity of persons always trump statistics, calling to mind the numerical inequality of our economic system will bring us closer to identifying with those who toil on the current minimum of $5.15 per hour.

For instance, did you know that the average minimum wage earner brings home more than half of his or her family’s weekly earnings? What’s more, the minimum wage today is just 33 percent of the average hourly wage of American workers, the lowest level since 1949. As it stands, the minimum wage in real terms is 26 percent lower than it was in 1979. For that majority of minimum wage workers who are the primary breadwinners of their families, their income simply does not add up.

Even with the earned income tax credit, meant to benefit the working poor, a single mother earning a minimum wage with two children would have a combined income of $14,097, 5 percent below the federal poverty threshold of $14,824. These numbers are even more startling if you put much faith in “family budget” measures of poverty which suggest that the annual income needed to support a family is between $23,000 and $46,000.

The minimum wage is not indexed to inflation and thus is only increased at Congress’ discretion. The last increase was in 1996-97, nearly 10 years ago, the second-longest stretch of government inaction since the minimum wage was instituted in 1938. We and other Democrats propose that the minimum wage should be increased to $7.25 per hour by 2007. But would such an increase really benefit that many people?

Traditionally, minimum wage increases did not curb poverty greatly because many poor families did not have any family members in the paid labor force. With welfare reform, more poor families are, however, now forced to rely on their earnings from low-paying jobs. Thus, now more than ever, a minimum wage increase is likely to have an impact on reducing poverty. Combined with the earned-income tax credit, this minimum wage increase would put a family’s income at $17,790 per year, about 16 percent above the federal poverty line.

The Economic Policy Institute estimates that 7.3 million workers would benefit from an increase in the minimum wage. Of those workers, 72.1 percent are adults and 60.6 percent are women. Taking into account spillover effects on other low-wage earners and near-poor families, an additional 8.2 million workers earning up to a dollar above the minimum wage would benefit from an increase. Approximately 1.8 million parents with children under 18 are contained within that larger 15.5 million people who would benefit from an increase. Through whichever lens you look at a minimum wage increase, it would make life better for a large number of poor and working families and individuals.

Arguments against a minimum wage increase usually focus on the idea that such increases will result in job losses or will erode the financial well-being of businesses. Yet several studies which looked at the 1996-97 increase recorded no systematic or significant job losses as a result of the higher wage. In fact, the researchers found that the low-wage market performed better than it had in decades with lower unemployment rates, increased family income, decreased poverty rates, decreased absenteeism and increased worker morale.

Americans are particularly fond of merit-based arguments. The claim goes as follows: If you work as hard as you can, then you should have your fair share of the pie. Given the evidence above however, it is clear that low wage workers suffer from grossly unequal pay. Catholic Doctrine informs us that we must have a preferential option for the poor. So, let us begin the process of restoring justice to all of our workers by committing ourselves to that preferential option and raising the federal minimum wage to $7.25 per hour.